Could Waiving Indonesia’s Visa Fee Boost Tourism?

JAKARTA, Indonesia—Indonesia wants to draw in more overseas tourists to help boost its foreign exchange revenues and prop up the weak rupiah.

To do so, it announced that it would waive visa fees starting next month for 30 countries, pushing some foreigners living in Indonesia to extend invites through social media to friends and family. The weak currency alone might be incentive for some tourists who will find it cheaper to visit Indonesia.

But inefficient infrastructure will continue to hold many visitors back, and the tourism ministry now says it could take much longer than a few weeks for the plan to be realized owing to a regulation that says countries that don’t give Indonesians free entry won’t get it in return.

The government is trying to overcome economic problems, especially the weak value of the rupiah against the dollar, said Vincent Jemadu, spokesman for the Ministry of Tourism. “The problem is we don’t know exactly whether those countries can also give the same free visa to Indonesia.”

Under the proposed exemptions, 45 countries would be free from having to pay the $35 visa on arrival fee, which grants them a 30-day stay in Indonesia. Tourism Minister Arief Yahya told local media that by waiving visa fees, Indonesia hopes to draw a million new tourists from overseas. Assuming those visitors spend an average of $1,200 during their trip, Indonesia could see additional foreign exchange income of $1.2 billion, he said.

Other officials say the visa fees have kept Indonesia from drawing as many visitors as neighboring Malaysia and Thailand, and it was time they were scrapped. Indonesia welcomed around 9.4 million foreign tourists in 2014, a 7% increase from the year before. It’s aiming to double that number to 20 million by 2019. In comparison, both Thailand and Malaysia saw nearly 25 million tourist arrivals last year.

“If you make it easy, then actually you can expect a flood of tourists from abroad,” said Wijayanto Samirin, an economics and finance adviser to Vice President Jusuf Kalla.

Mario Hardy, CEO of the Bangkok-based Pacific Asia Travel Association, said visa-friendly policies do boost tourism, especially for short holidays or last minute travel.

“Any country that simplifies the application process or removes [visa] fees will see an increase [in arrivals],” he said in an email. “These are man-made barriers, and given a choice people will pick an easier destination to access.”

For Indonesia, however, getting a visa “is not a difficult process,” said Yuliana, head of hospitality and tourism management at Binus University in Jakarta. “So visa fee or not, tourists who really want to come to Indonesia will come.”

She says the main reason Indonesia doesn’t draw as many tourists as its neighbors is the lack of roads, airports and other connective infrastructure that helps travelers move around the sprawling archipelago.

“We have good hospitality but we need to improve our infrastructure,” said Ms. Yuliana. “The product is there – good mountains, good beaches – but the management needs improvement.”

Mr. Jemadu says it’s true that a lack of physical infrastructure is holding back Indonesia’s tourism potential. He says the ministry is working with other related ministries, such as transportation and public works, to address the problem.

Doing so could entice more visitors and also help meet another of President Joko Widodo’s goals – the development of Indonesia’s outlying areas.

“The country requires long-term infrastructure planning and increased air connectivity to further develop tourism beyond the well-known destination of Bali,” said Mr. Hardy. “As with other countries with similar challenges, these other destinations need to be better marketed to drive their development,” he added.

Mr. Jemadu said the ministry is still developing several strategies focused on branding and promotion, and it plans to devote about half of its 1 trillion rupiah ($76.7 million) budget to marketing.

In the short term, however, unless the government reviews the law on reciprocity or convinces countries with visa restrictions for Indonesia also to waive them, Mr. Jemadu said it would “be very difficult” to push through the new plan to scrap visa fees.

“We’re still in the process of selecting those 30 countries,” he added.

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